Many taxpayers who are owed tax refunds not only rely on receiving their tax refunds, but also desire/need to have access to at least part of their tax refund money as soon as possible. However, it can take many government agencies, including the Internal Revenue Service and state tax agencies, weeks, or even months, to process a taxpayer's tax return, generate a tax refund check/deposit data, and then mail/deposit the tax refund.
Currently, a taxpayer who cannot, or does not want to, wait weeks, or months, for their tax refund money must obtain a tax refund loan. Tax refund loans are typically provided, or arranged, by/through large tax preparation service providers. Typically, a tax refund loan is just what the name implies, a short-term loan that is provided based on using the expected tax refund check/funds as collateral. In most cases, these tax refund loans are provided to the taxpayer in exchange for both a significant loan initiation fee and a relatively high annual percentage rate incurred until the tax refund check is received.
These currently available tax refund loans have several disadvantages. First, since those taxpayers needing their tax refund money badly enough to accept the burdensome terms of tax refund loans are likely to be those taxpayers in most need of the funds, it is arguable that the current tax refund loan system takes advantage of those taxpayers who can least afford to pay loan initiation fees and high annual percentage rates. Consequently, currently, it is often the case that those in most need of the funds must surrender significant portions of these needed funds in order to obtain access to what, in reality, is their money that has already been essentially loaned to the government interest free.
In addition, even when a taxpayer opts to pay the price of a tax refund loan, the loan can still take several days to process and therefore the taxpayer still may not obtain the funds they need quickly enough. In addition, even when the tax refund loans do become available, the taxpayer typically has to either go back to the office of the lending party to obtain a check, wait to receive the check by mail, or wait for funds to be deposited into a bank account associated with the taxpayer. All three of these options become even more problematic for a taxpayer who does not maintain a bank account.
The situation described above is even more problematic when it is realized that many taxpayers who need access to their tax refund money may not actually need access to all their tax refund money, but may only need access to a fraction of the money just to get by until the tax refund check arrives.
As a result of the situation described above, taxpayers currently have no simple or inexpensive way to quickly and conveniently access at least a portion of their tax refund money after filing their tax returns. This situation not only represents a disservice, and significant economic burden, to some taxpayers, but it also inhibits the free flow of commerce and creates unnecessary economic hardship for thousands of people.